RIGHT NOW is the greatesst time of oportunity for CHANGE!

[Bob Ipock]

The papers and news are focused on Enron, Wordcom and all the scandals in business and accounting. The stock market is in the gutter due to a lack of confidence. This is a great oportuint for appraisers.

I spent a couple of hours today, e-mailing newspapers, magaizines, reportes etc. spelling out AGAIN the rampant fraud going on involving appraisals and mortgage lending.

The amount of fraud and personal financial rape is far greater in appraisal/lending than in the stock market. Statistics show that homeownership is far greater than stock ownership. MORE PEOPLE are likely to affected by dishonest appraisal/lending practices than stock market investors.

What better time to contact your legislators, newpapers, public interest groups etc. and SOUND THE ALARM about appraisal and lending fraud.
Sooner or later some hot shot reporter is going to expose this charade.

PLEASE contact anyone you can NOW, while fraud, dishonesty and incompetency are such hot news. Let them know about THE PETITION and that some appraisers are TRYING to stop inflated appraisals and other methods of dishonesty among our ranks. Don't forget the lender issues! Appraisal fraud would not and could not exist without dishonest lenders who want the "to make this deal happen"....regardless of who gets hurt.

If you do nothing else, e-mail your local paper and ask them to run a series on the corruption that YOU HAVE SEEN involving appraisals and lenders.

 

[liznindy]

Bob,

Saw your comments referenced today in the real estate section of the Sunday Star. Very good and well worded article. I hope it will do some good. I do believe they (whoever they are) are being to listen. However, I am not sure if they will change the process or just do away with appraisers.


On another topic:

If you all saw the appraisal I just reviewed, you would agree there are those in the appraisal business who shouldn't be :x whether or not there is lender pressure, is beside the point.


Is anyone out there reading these appraisals at time of underwriting. This one (the one I am reviewing) is chock full of errors, inconsistencies, cantradictions.....it would not take an appraiser to see the errors. The report was performed by a trainee and signed off on by a Certified Appraiser who checked the box stating he viewed the property. Yeah, but did he/she read the completed report!? ARGGHHHH

 

[Terrel L. Shields]

Contradiction, I believe. Checking spelling is a pet peeve of mine as a co-signatory of a trainee. But true reviewing takes more time than the trainee likely invested in the first place. So what's the advantage of a trainee?

I am amazed at how few people avail themselves of lender databases, neighborhood databases, comparables databases, etc. Zoning.....everything from rural farms to duplexes are "R-1". You would think that was the only zoning possible.

I have tried to have a weekly meeting with my subs as a training session. They are always too busy. And I work 16 hr. days part of it devoted to repairing their screw ups...

And narrative reports. The big secret of narratives is they can be simpler than forms. But you could get most appraisers to learn Swahili before you could get them to take a twice a week night class for 6 weeks in Word or WordPerfect...

Mistakes are made by us all. But sloppy work is no mistake. It is a lack of real professionalism every much the problem as is lender pressure.
ter

 

[Paul Ness MAI]

(1) Ter and Liz, I couldn't agree more with you both. I am a commercial review appraiser for a lender. I also see a few residential appraisals when related to a commercial deal. Our primary market consists of two adjacent counties (where I previously worked and know the market) and I personally know 90% of the commercial appraisers and about half of the residential appraisers in the market.

I am astounded at the work coming out of some offices. I maintain an approved appraiser's list and only use those appraisers whose work is professional and accurate. Sometimes even the good and reputable appraisers make typos, we're all human. But sometimes I have to review a report done by one of the infamous "lower tier" appraisers because it was done for another lender and then the deal comes to us. A side note to this is that national banks tend to get more scrutiny from govt examiners than state chartered banks. Even though they both are supposed to follow the same regulations, state chartered banks can more easily get away with using less competent appraisers. I work for a national bank holding company and our files and appraisals are combed over rather carefully by Uncle Sam's agents.

There are two kinds of these appraiser bottom feeders. The first is the purely incompetent appraiser who has never been adequately educated. They may be new and ignorant, or old and set in their ways. The second is the absolute ***** who will twist the results to suit the client. I think the most dangerous type is one who doesn't know what they don't know and is more than eager to take on any assignment but doesn't have a clue where to begin. What amazes me is how these appraisers are able to stay in business.

(2) I have another related bone to pick regarding a subject that comes up from time to time on this forum. Some lenders get blamed here for using appraisers who "make the value" for them. These lenders clearly deserve their share of the blame for not wanting accurate appraisals, but I say these appraisers deserve more of the blame for not having the integrity or backbone to say "no" to the lender....I further blame this whole scenario on state certification. State certification made all certified appraisers equal in the eyes of many lenders, so they can legally use the cheapest and fastest they can find. This creation of a "homogeneous" product has increased competition by leveling the playing field for good and bad appraisers. This in turn has driven down fees, particularly in commercial work where jobs are individually quoted and fees are much more fluid. So the hungrier appraisers who may not be as diversified away from financing work, and who may not do the best work to begin with, may be more tempted to ***** themselves to keep food on the table. It is a mess.

 

[Don Clark]

8)

I have posted this before but thought it might be of interest here. From July 2000 until February 2001 I reviewed about 12- FHA Appraisals for my area of Virginia. Here is a brief recap of what I found:

No appraisal ever came in below sales price. The average appraised value was almost 17% above sales price. One appraisal was 100% above sales price. Several were 25%. 35% amd 37% above sales price. 95% missed most needed repairs. About 5% were fraudulent in that data for 1 comp was swamped for another comp that had a better picture. Flakes of apparent lead based paint as large as dinner plates could be seen from the street. In 1 the roof was falling in. A new home built for a handicapped person on an interior review had 15 needed repairs. An appraiser carefully took photos of the subject so as not to show the high voltage metal towers directly behind the subject and within the fall distance.

All were reported to FHA. As far as I know, no action was ever taken.

I have been reading where financial advisors are suggesting that their investors consider taking a sizeable portion of their money and investing in real estate. I only have one thing to say...........Today the Stock Market, Tomorrow Real Estate.

Don Clark, IFA

 

[Tim Hicks (Texas)]

Gee, I thought I was the only reviewer that actually got to review "dirty" appraisals. Don, your points are more realistic than people can imagine. The Dow sank uner 8,000 today and I bet it keeps going. Appraised values and sales prices for homes have been steadily "pushed" for about ten years now. The market is correcting itself and so will the real estate market. Foreclosures are up, way up and values are not climbing. We can all shake our heads in disbelief, but appraisers have had a hand in the rise in property values. One pushed value or appraisal done with comps outside the neighborhood sets a new market for that neighborhood. Then, the next appraisal gets pushed past that one. I have been watching and reviewing appraisers push the values and utilize bad data for over ten years. That spiral can come down as well as go up. You could say that appraisers are the accountants of the real estate market. But, don't quote me on that.

 

[Leon Stewart]

Most of the appraisal problems could be eliminated by separating the Lender from the Appraiser. Until that happens, nothing will change.

Leon

 

[Joe Birrell (NY)]

Bob:

You are 100% correct. I have been interviewed by 3 newspaper reports
in the past 2 weeks. They are interested in running stories on mortgage fraud, contract flips, lender pressure, etc. Let's get the word out there !
This is our only tool available to us given the current state of affairs
(weak lobby/lack of representation, lack of enforcement, etc.)

 

[Leon Stewart]

Joe:

I don't know where you have been, but there have been numerous Articles on the Mortgage/Appraisal Process as long as I can remember, and no meaningful changes have occured. You keep forgeting that the "powers that be" are making money from this process. So they wont to continue to make that money while shifting the blame elsewhere.

leon

 

[Joe Birrell (NY)]

Leon:

Unfortunately I have to agree with you. The last thing the economy needs is to find out that the re portfolios are worthless.........but what the hell, it makes me feel better. If the truth be known, the economy of the western
world would collapse.